US note v Fed note

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June 23, 2024 at 4:58 pm #9999993062
David Merrill
Keymaster

    The grammatical substutions will lead us down an edifying path.

    “Gold” was replaced by “lawful money” in 1933 when the New Deal went into effect. And since Federal Reserve bank notes in Title 12 USC 411 are redeemable in Lawful Money – formerly in gold metal – we know by the grammar alone that Federal Reserve notes are not lawful money. They are different than one another.

    It is worth developing the reason why Congress will not define lawful money, but we are shelving that here, for now.

    The issuance of United States notes is found at Title 31 USC 5115.

    §5115. United States currency notes

    (a) The Secretary of the Treasury may issue United States currency notes. The notes-

    (1) are payable to bearer; and

    (2) shall be in a form and in denominations of at least one dollar that the Secretary prescribes.

     

    (b) The amount of United States currency notes outstanding and in circulation-

    (1) may not be more than $300,000,000; and

    (2) may not be held or used for a reserve.

    I have bolded the feature that makes US notes inelastic. By contrast notes from the Federal Reserve are of course elastic.

    In 1971 the Treasury declared that Fed notes were functional in all ways for US notes and so there was no need to issue any more US notes; only Fed notes.

    One thing to remember while demanding redeemed lawful money is that you will receive US notes in the form of Fed notes. That is the best you can hope for. And the mentality when tendering your US notes, even when buying groceries with a real $10 US note is that your US note is pegged in value to the Fed note. It is not fair and I once blamed Congress for pegging the value of both inelastic and elastic currency. Eventually I realized that it is people doing it, in ignorance.

    The other thing to remember is that gold is fine white powder. Gold metal is not so scarce and does not provide enough value in application to justify its high value. Most of it is dug up, and then put back into the ground (concrete vaults). That is shelved for now, to be developed in Health forums – Bible manna is monatomic gold.